Apple and OpenAI are in a legal fight now, and a new report from Bloomberg’s Mark Gurman lays out just how ugly things have gotten between the two. The lawsuit itself is about trade secret theft, but Gurman’s sources paint a bigger picture of OpenAI scrambling to build an AI-powered iPhone rival.
People familiar with the hardware team’s progress told Gurman that OpenAI had barely anything to show beyond basic concepts and early prototypes when it acquired io Products for $6.5 billion last year. That’s the company co-founded by former Apple design chief Jony Ive, by the way. Insiders say the firm still hasn’t landed on a clear product strategy, even after committing billions toward physical devices ahead of an eventual IPO.
The goal right now, according to people familiar with the plans, is a smartphone replacement that runs entirely on AI. Development has been rough though, and sources say OpenAI’s first actual release could end up being something simpler, like smart glasses, earbuds, or AI speakers.
All that talent poaching has torched whatever relationship the two companies had left. Gurman points to the sudden exit of Paul Meade, Apple’s smart glasses head, who was recruited by OpenAI back in June. Apple didn’t give him the usual transition period other departing execs get. Management escorted him out of the building right away, which tells you how defensive Cupertino has become.
All in all, about 400 Apple employees jumped ship to work for OpenAI.
Then there’s Tang Tan, the ex-Apple exec leading OpenAI’s hardware push. Former colleagues say he’s always taken massive risks and moved at a relentless pace. One person who worked directly with Tan described him as someone well-known for moving fast, playing fast and loose, and breaking things throughout his career.
Despite all of this, Apple said it reached out to OpenAI in February, detailing its allegations and findings about the company’s secret info making its way over. According to Apple, OpenAI didn’t even respond.
OpenAI said in a statement says it has no interest in stolen IP. But the internal pressure and aggressive hiring tactics described by insiders show just how desperate the race for the next generation of consumer hardware has gotten.
Grab an extra large back of popcorn folks. This lawsuit is going to get juicy.
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